LR Global asked to withdraw "illegitimate" investments from bdnews24.com

The securities regulator has asked LR Global Bangladesh Asset Management Company to withdraw "illegitimate" investments worth Tk 490 million from online media platform bdnews24.com, made by diverting cash from six mutual funds.

The asset manager has 30 days to comply with the order issued by the Bangladesh Securities and Exchange Commission (BSEC) on Wednesday.

Otherwise, an aggregate amount of penalties worth Tk 600 million will be imposed on five top executives of the company, including Chief Executive Officer Reaz Islam, as per the order.

According to information provided by the BSEC, LR Global injected Tk 490 million in bdnews24.com through purchase of 39,200 shares at Tk 12,500 each, with a premium of Tk 12,400.

"LR Global made the investment in illiquid shares of a weak company at an abnormal price with a bad intention," said BSEC spokesperson Md. Abul Kalam.

In the press release, the BSEC said the investment made in 'illiquid' shares of bdnews24.com was in breach of securities rules and it inflicted a loss on unit holders of the MFs.

The pooled funds are DBH First MF, Green Delta MF, AIBL 1st Islamic MF, LR Global Bangladesh AMC BD MF One, NCCBL MF-1, and MBL 1st MF.

The securities regulator has also decided to conduct an investigation to find out the role and responsibility of Bangladesh General Insurance Company, a trustee of the pooled funds managed by LR Global.

The market watchdog said it had taken the decisions on completion of an investigation into irregularities committed by the individuals and subsequent hearings.

Funds collected under the scheme of an MF can only be invested in listed securities, initial public offerings (IPOs), and transferable securities in the money market, said BSEC officials. Therefore, bdnews24.com is not an investable tool for MFs, they said.

LR Global's investment came under scrutiny of the previous commission in October 2019.

Then, the commission put a pause on the investment in the online news platform.

LR Global was also asked at the time to submit all documents relating to the investment to the BSEC for it to verify whether the transactions had been made in line with the rules.

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